Difficult to reduce pressure on electricity costs, Germany’s crude steel production drops to a new low in 2023

On January 23, 2024, the German Steel Federation (WVStahl) stated that under pressure from high energy prices and sluggish demand, Germany's steel production in 2023 has fallen to a new low. In 2023, Germany's crude steel production was 35.438 million tons, a year-on-year decrease of 3.9%.

The German HX460LAD+ZA steel Steel Federation stated that crude steel production in 2023 was the lowest since the 2009 market financial crisis. However, after 2009, the decline in crude steel production caused by the financial crisis quickly recovered. Currently, high electricity prices in Germany and sluggish demand in the construction market seem to have had a more severe impact on electric furnace plants. In December 2023, the crude steel production of German electric furnace plants was 533000 tons, only a slight increase of 0.4% year-on-year. In December 2022, due to poor demand, Germany's crude steel production sharply decreased. Therefore, although crude steel production slightly increased year-on-year in December 2023, overall crude HX460LAD+ZA steel production remained at a historical low.

In 2023, Germany's short process crude steel production was 9.806 million tons (accounting for 27.6% of the total production), a year-on-year decrease of 10.8%. Lower than the crude steel production of 11.3 million tons in the short process in 2009. In addition, in December 2023, the steel production of oxygen top furnaces in Germany was 2.099 million tons, a year-on-year decrease of 2.9%. Oxygen top furnaces in Germany are mainly used for sheet metal production. In December 2023, the local hot coil price in Germany was approximately 688 euros/ton EXW, higher than the same period last year. At that time, the price was about 643 euros/ton EXW. Although demand is still sluggish, cost pressures have led to further increases in the price of hot coils in Germany. The current factory delivery price is about 720-750 euros/ton EXW.

Faced with high costs, the Chairman of the German Steel Federation, Maria, publicly called for political action to alleviate the cost burden of steel. Maria stated that since the beginning of 2024, transmission network costs have doubled, making them more expensive than ever before HX460LAD+ZA steel.